Credit Repair Services Cost (Don’t Get Ripped Off!)

By James Young on June 2, 2014
Credit Repair Services Cost (Don't Get Ripped Off!)

It sounds too good to be true: rather than letting time work its healing magic on your credit score, you can purchase the services of a credit repair firm to improve your score in just a few months and be on your way to a new home purchase. But what do credit repair services cost and how effective are they?

The short answer is that, like most things that sound too good to be true, a quick fix to your credit score is probably not the best use of your hard-earned cash. While there are some credit repair companies that are complete scams, in many cases, the services offered actually can have a positive impact on your credit score.

However, with a little time and effort, you can go through the same credit repair steps and get similar results. Plus, there is the chance that engaging the services of a credit repair company could actually harm your credit score rather than pulling it upward.

Credit Repair Agencies

The riskiest path to take in seeking to improve your credit score is to employ the services of a credit repair agency. There are many credit repair organizations that will simply take hundreds, even thousands, of your hard-earned dollars but do nothing to improve your score.

If you decide to go this route, do your homework. Check into online reviews, particularly with reputable sites like the Better Business Bureau. Avoid companies that require a great deal of money upfront or that force you into a long-term contract.

Some credit repair agencies will advertise that they have actual credit repair attorneys available to take over your case.

But don’t be fooled into thinking these companies can do more for you than those not advertising they have an attorney. Many are law firms in name only. They do not have attorneys working your case.

Prices for these credit repair services can range from as little as $35—$50 a month, on up to several hundred monthly. Many also charge fees for things like securing a copy of your credit report. While most agencies charge by the month, a few ask for a lump sum upfront to perform a set of steps designed to improve you credit score.

Going It Alone

The biggest reason you should think twice before paying to have a company improve your credit score is because in most cases, those companies are going to take the same steps you can legally take on your own to clean up your score.

The fact is, it is your right to dispute any errors you find on your credit report and the three major credit bureaus must investigate your dispute at no additional charge. That means, anything a credit repair organization can do for you legally, you could be doing on your own.

The three major credit reporting bureaus each have websites that provide information on the procedure you should follow for disputing erroneous information. In most cases, you will have the option of filling out a form online or mailing a letter.

Be aware, the only information you can have removed legally from you credit report is information that is in error. Credit repair organizations that claim they can do more than that are not being entirely truthful and are best to be avoided since their actions may not be legal.

Keep in mind also that If you file disputes that the bureaus deem are frivolous, which usually occurs when a consumer disputes all or most of any negative items on his or her report without providing any supporting documentation, your score could actually decrease.

Credit Counseling Nonprofit Organizations

Unlike a credit repair company, a credit counseling organization is typically in the business of helping you to make better credit decisions in the future.

While they are not likely to offer a quick solution, these organizations—particularly those that are organized as nonprofits—can provide some assistance in getting your credit back on track. Many will even negotiate payment plans with your creditors on your behalf.

If you are looking to improve your credit score so you can get the best possible interest rate on a future real estate purchase, making use of services offered by a credit counseling organization, particularly when the services are free or at little cost to you, may be the right choice.

In addition, it’s always a good practice to obtain a copy of your credit report and dispute any erroneous statements prior to applying for a loan. However, this step can be take on your own, without the cost of a credit repair agency.

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About James Young

My name is James Young- I love red wine, sailing, and playing guitar. I believe that everyday is truly a gift. I'm blessed to live five minutes from the sand in the beautiful city of Long Beach, CA. When I'm not assisting homeowners, you'll find me belting melodies with friends around a campfire, wandering the halls of an art exhibit, or watching ESPN re-runs until the sun comes up. So what am I doing here, you might ask? In a couple of sentences- I'm passionate about empowering first-time and experienced home buyers to make their dreams a reality. Whether it's saving thousands on your home loan, buying your first home, or acquiring your first investment property, I'm always here to help. Don't hesitate to ask questions, and please remember to "share the love"! :) #loveloans #loverealestate #lovelife!
  • James Mason, J.D.

    While I appreciate the information you’re providing on the site, some of it is inaccurate and misleading. I’m an attorney and have been dealing with credit in various capacities since the 1980s. While the credit bureaus want you to believe that you can use their dispute system to remove negative items, the reality is that this system rarely works as advertised.

    Just last month, the State of Mississippi filed suit against Experian for repeated failure to remove erroneous items from credit reports, a lawsuit which is now in Federal court. They reported one consumer as deceased when he was not and refused to correct it, and in another case they reported someone as being on the terror watch list. These two examples are not isolated cases and their refusal to remove items has far-reaching consequences.

    Thirty-two states are investigating all the credit repositories (bureaus) for violations of the FCRA. Keep in mind these are publicly traded companies whose loyalties are to their stockholders, not the consumer.